Comments on: What are supra pro rata rights? http://venturehacks.com/articles/supra-pro-rata Advice for entrepreneurs. Thu, 08 Jan 2009 03:14:07 +0000 http://wordpress.org/?v=2.5.1 By: What is a right of first offer or right to maintain proportionate ownership in future financings? | Startup Company Lawyer http://venturehacks.com/articles/supra-pro-rata#comment-852 What is a right of first offer or right to maintain proportionate ownership in future financings? | Startup Company Lawyer Sat, 01 Sep 2007 07:46:46 +0000 http://venturehacks.com/articles/supra-pro-rata#comment-852 [...] and wishes to increase their percentage ownership. Please read the commentary from AsktheVC and Venture Hacks for more thoughts on this [...] [...] and wishes to increase their percentage ownership. Please read the commentary from AsktheVC and Venture Hacks for more thoughts on this [...]

]]> By: Suzie Dingwall Williams http://venturehacks.com/articles/supra-pro-rata#comment-395 Suzie Dingwall Williams Mon, 18 Jun 2007 14:28:26 +0000 http://venturehacks.com/articles/supra-pro-rata#comment-395 Yokum makes a good point, which he always does, damn him. Good thing we don't compete for business in the same marketplace. These are pretty good "moral rights" to provide to angels who worry about future dilution. They give the comfort of being able (for a limited time) to continue to participate and buy up, if and as their resources allow. It's perilous if your angels are really archangels, with unlimited means, but most angels up here don't fit that bill. Yokum makes a good point, which he always does, damn him. Good thing we don’t compete for business in the same marketplace.

These are pretty good “moral rights” to provide to angels who worry about future dilution. They give the comfort of being able (for a limited time) to continue to participate and buy up, if and as their resources allow. It’s perilous if your angels are really archangels, with unlimited means, but most angels up here don’t fit that bill.

]]> By: Yokum Taku http://venturehacks.com/articles/supra-pro-rata#comment-394 Yokum Taku Mon, 18 Jun 2007 06:05:06 +0000 http://venturehacks.com/articles/supra-pro-rata#comment-394 I just completed a Series A financing last week that had super-pro rata rights in it. In other words, the investors received the right to collectively purchase 75% of future financings. It's relatively unusual, but seems to be showing up in term sheets from time to time and it seems like a recent phenomenon. The provision wasn’t worth walking away from a deal, or even arguing too much, other than indicating that it was unusual – compared to the other issues in the financing (board control, drag-along rights, etc.). However, this financing also had a pay-to-play provision, meaning that the Series A converted into common stock if the Series A did not maintain their normal pro rata in future financings. Anyway, the sting of the super-pro rata was offset by the pay-to-play in this deal. I just completed a Series A financing last week that had super-pro rata rights in it. In other words, the investors received the right to collectively purchase 75% of future financings. It’s relatively unusual, but seems to be showing up in term sheets from time to time and it seems like a recent phenomenon. The provision wasn’t worth walking away from a deal, or even arguing too much, other than indicating that it was unusual – compared to the other issues in the financing (board control, drag-along rights, etc.). However, this financing also had a pay-to-play provision, meaning that the Series A converted into common stock if the Series A did not maintain their normal pro rata in future financings. Anyway, the sting of the super-pro rata was offset by the pay-to-play in this deal.

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